High Court Hears Arguments In Case Over Union Agency Fees

WASHINGTON, D.C. - (Mealey's) The U.S. Supreme Court heard oral arguments Jan. 10 in a case challenging what constitutes proper notice of temporary mid-year fees assessed by a union and used for political purposes and whether the appeal is moot because the union sent a notice to all members of the class suing it, offering to fully refund the fees (Dianne Knox, et al. v. Service Employees International Union, Local 1000, No. 10-1121, U.S. Sup.) ( subscribers may access Supreme Court briefs for this case).

(Oral argument transcript.  Document #73-120113-015T.)

Jeremiah Collins of Bredhoff & Kaiser in Washington argued on behalf of the Service Employees International Union, Local 1000, that the judgment by U.S. Judge Morrison C. England of the Eastern District of California in favor of the employees, one the union had appealed, should be reinstated.  He also argued that it's not up the high court to determine whether the notice provided by the union in offering refunds was sufficient.  "If the notice we have given does not comport with what the district court judgment which was not appealed by the Petitioners requires, it will be provided by the district court," Collins said. 

Moving on to the merits of the case, Collins told the high court justices that the mid-year fee charged by the union was "a temporary dues increase which became permanent and which simply increased the total flow of dues and fees into the general treasury and which went for the usual, the kinds of activities the union had always funded."  To that end, a notice as required under Chicago Teachers Union v. Hudson (475 U.S. 292 [1986]) [an enhanced version of this opinion is available to subscribers / unenhanced version available from lexisONE Free Case Law] was not necessary, he said. 

But William J. Young of the National Right To Work Legal Defense Foundation Inc. in Springfield, Va., argued on behalf of the state employees that a Hudson notice was necessary and that case was not moot.   

He argued that the union's notice to employees regarding the refund was "wishy-wash[y]" and "was inadequate because it failed to represent the importance of the judgment that the nonmember class had won."   

The union and the State of California entered into a series of memoranda of understanding controlling the terms and conditions of employment for employees, including a provision requiring that all state employees in the bargaining units join the union as formal union members or, if opting not to join, pay an "agency" or "fair share" fee to the union for its representational efforts on their behalf.  The agency fee is calculated as a percentage of the union dues paid by members of the union. 

Each June, the union issues a notice as required under Hudson to all nonmembers.  The notice is meant to provide nonmembers with an explanation of the basis for the agency fee.  Nonmembers have 30 days after each notice to object to the collection of the full agency fee and instead elect to pay a reduced rate based on the percentage ratio of chargeable expenditures to total expenditures.  All objections are to be resolved by an impartial decision maker. 

On July 30, 2005, the union's Budget Committee proposed an emergency temporary assessment to create a "Political Fight Back Fund."  It was stated that the fund would be used for a variety of political expenses in response to several anti-union propositions on the November 2005 special election ballot in California. 

On Aug. 27, 2005, union delegates voted to implement the temporary dues increase.  On Aug. 31, 2005, the union sent a letter to all members and agency fee payers stating that they were subject to the new increase, which would be used "to defeat Propositions 76 and 75."   However, later, in response to inquiries, the union stated that the funds would be used for political and collective bargaining actions. 

Eight agency fee payers, representing nonunion employees who objected to the union's 2005 Hudson notice and those who did not object, sued the union in the Eastern District of California.  The plaintiffs alleged that the assessment violated their First, Fifth and 14th Amendment rights under 42 U.S. Code Section 1983.  Judge England granted the plaintiffs' summary judgment motion.  The union appealed. 

A Ninth Circuit U.S. Court of Appeals majority on Dec. 10, 2010, reversed and remanded with instructions to deny the plaintiffs' motion for summary judgment.  It also reversed the denial of the union's motion for partial summary judgment regarding the consent of nonobjectors under California law and remanded with instructions to grant the motion. 

The agency fee payers petitioned the high court in March.  In June, the high court agreed to hear the appeal.  During the briefing process, the union moved to dismiss the case as moot based on a Sept. 29 notice it sent offering refunds of the fee.  

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